Many of us have romanced the idea of winning the lotto. The fantasies that follow are usually vivid and specific: luxury cars, extensive travelling and beachside property tend to feature prominently. The more ordinary lotto of a year-end bonus or thirteenth cheque is mentally spent way before we even get it, and often in very poor ways.

The sun will rise (somewhere) tomorrow. The earth will spin on its axis for the foreseeable future, and time will keep going. These things we take for granted are all predictions; some of the few that we can rely on. Nothing guarantees them, but few doubt them. This confidence in the movement of celestial objects and nature’s faithful progress encourages us to believe in the power of prediction – even when the odds prove otherwise...

A successful investment is when there is a match between the risk you expect or perceive and the actual risk of the fund. Calibrating your risk tolerance is a problem of psychology and the most difficult psychology to solve is often your own.